A new report released on Friday showed 1 in 10 Australian school children failed to meet minimum standards for reading, writing and numeracy.
The 2009 National Assessment Program Literacy and Numeracy (NAPLAN) report showed test results for students in years three, five, seven and nine.
Although the overall picture was a bright one, there were some areas in which students performed worse on average than last year.
"Ninety percent of students sitting the national test achieved the national benchmark or above," Australian Education Minister Julia Gillard told reporters.
Children in the Northern Territory continued to lag far behind the rest of the nation.
Overall, more students failed to meet minimum benchmarks in year nine than in any other year tested.
"We need to make a big difference in the early years so kids aren't behind by the later years of schooling," Gillard said.